The Notes are convertible into shares of common stock at any time prior to maturity at $0.068 per share and will mature on December 1, 2014. The conversion price of the Notes is subject to a "full ratchet" and other customary anti-dilution protections. The Notes require mandatory redemption payments beginning on June 1, 2014 and contain customary affirmative and negative covenants of the Company. The Warrants are exercisable at $0.082 per share and contain "weighted average" and other customary anti-dilution protections.
In connection with the closing of the offering, holders of the Company's 12% secured convertible notes in the principal amount of $3,380,000 and related warrants to purchase 13,520,000 shares purchased from the Company in December 2012 and March and April 2013 agreed to convert their notes and exercise their warrants on a cashless basis, respectively.
The company markets such products as Kardashian Beauty By Kourtney, Kim & Khloe, Uglydoll and Malo by Mario Lopez.